U.S. retail sales rebounded by more than expected in the month of July, according to figures released Tuesday by the Commerce Department, although the report also showed that the contraction in June was worse than initially reported.
Overall U.S. retail sales were up 0.8 percent in July to a seasonally adjusted level of $403.9 billion, a notably stronger increase than the 0.3 percent growth predicted by most economists.
However, June retail sales figures, which had initially shown a 0.5 percent decline, were revised even further down to show a 0.7 percent drop for the month.
Growth in retail sales was generally strong across the various sectors of the economy, according to the July report.
Motor vehicle sales, which had fallen sharply in June, posted a strong, 0.8 percent rebound in July.
Excluding the automotive sector, retail sales were up by 0.8 percent in July, also notably above the 0.4 percent growth predicted by most economists.
Gas station sales, which also fell sharply in June, rebounded in July, showing a 0.5 percent increase.
Excluding both the automotive and gasoline sectors, retail sales for July were up 0.9 percent. Core sales, which exclude autos, gasoline and building materials, also rose by 0.9 percent.
Jennifer Lee, senior economist at BMO Capital Markets, said, "It looks like lower gas prices, a nice rally in stocks and stronger job growth (for July, at least), and a few months away from the stores, helped boost consumer spending."
"Again, a good start to the quarter but continued job gains are needed to ensure it continues," she added.
Some of the strongest retail sales growth was seen at sporting, hobby, book and music stores, which saw a 1.6 percent increase in sales. Sales at furniture and home furnishing stores also showed a notable 1.1 percent increase.
Non-store retailers, a sector that includes electronic shopping and mail order, saw a 1.5 percent growth in sales, while health and personal care stores posted a 1.1 percent increase, the strongest growth since May 2011.
The 0.3 percent growth posted by food and beverage stores and the 0.5 percent increase in sales at gasoline stations were among the weakest sectors in July, though sales growth remained in positive territory in all sectors, according to the Commerce Department.
On a year-over-year basis, overall retail sales were up 4.1 percent from July 2011, while non-automotive sales were up 3.2 percent.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.